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The Secretary of State for Work and Pensions (Mr. David Blunkett): I welcome back to the House of Commons the shadow Secretary of State, who is experienced, thoughtful and mature—just the sort of individual to be rejected as the leader of the Tory party. When a maiden reaches the altar for the second time, the first betrothal must be annulled, but the present Opposition have no values, no policies and no principles, so the annulment will be difficult. As we have seen this afternoon, he has not yet reached a consensus in his own mind, never mind within the shadow Cabinet. On the other hand, his constituency has a fine tradition—the much lamented Alan Clark, the still lamenting Michael Portillo and the flower show—which provides an interesting background for him to address
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some of the serious issues around welfare reform, pensions and employment with which we will be dealing in the coming months.

The Liberal Democrat Treasury spokesman, the hon. Member for Twickenham (Dr. Cable), declared that he has an open mind. He presumably has an open cheque book, too, and he uses invisible ink that changes his writing depending on which part of the country, borough or city he is in. I think he said that he would apply local income tax at a flat rate across the country, which means that it would not be a local income tax. [Interruption.] Oh; it will be a flat tax at a variable rate with a variable contribution from the Treasury to wipe out the inevitable variations. At least it will provide us with some entertainment over the years to come.

Before I mention my hon. Friends who have made their maiden speeches, I congratulate my right hon. Friend the Member for Torfaen (Mr. Murphy) on his gracious and thoughtful speech. He was a great friend; he showed me great kindness on occasions when I needed it; and I will miss his presence in the Cabinet. We owe him a debt of gratitude for his work in Northern Ireland.

I congratulate all new Members, and my hon. Friends in particular, on their maiden speeches, including my hon. Friends the Members for Normanton (Ed Balls) and for Wolverhampton, South-East (Mr. McFadden). When No. 10 and No. 11 work together, we are invincible, and I am sure that when former occupants of No. 10 and No. 11 work together, we will be equally invincible on the Back Benches. [Laughter.] It is absolutely true.

My hon. Friends the Members for Worsley (Ms Keeley), for Blaydon (Mr. Anderson), for Plymouth, Devonport (Alison Seabeck), for Bishop Auckland (Helen Goodman), for Wakefield (Mary Creagh), for Ochil and South Perthshire (Gordon Banks) and for Gateshead, East and Washington, West (Mrs. Hodgson) all made excellent speeches. I am particularly grateful to my hon. Friend the Member for Blaydon, because I visited his constituency and his majority was undoubtedly enhanced enormously by my visit, and to my hon. Friend the Member for Wakefield, who mentioned David Hinchliffe, who is a long-standing friend of mine and who did a tremendous job as the Member of Parliament for that constituency.

I also want to mention the comments of my hon. Friend the Member for Worsley (Ms Keeley), who reflected on the importance of our welfare-to-work policies and the contribution that they can make.

My hon. Friend the Member for Bishop Auckland mentioned bluebells, on which I commented in a poem during the general election. I want to assure her that my right hon. Friends the Chancellor and the Secretary of State for Environment, Food and Rural Affairs will ensure that global warming does not wipe out the bluebells, although we have every intention of pushing back the blue tide that emerged halfway up the beach and then receded again on 5 May.

The Chancellor of the Exchequer referred to the tremendous strides that we have made over eight years. When I was Secretary of State for Education and   Employment, I was involved in the way in which   employability and employment policies were implemented in the first four years, and had the privilege
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of working with my right hon. Friend on establishing the new deal programme, through which more than 1 million people passed into work, more than 0.5 million of whom were young people over the age of 25. I am proud that 75 per cent. of the working age population now have a job and that more than 2 million extra people are now offered the opportunity of working for themselves, building dignity and self-respect.

I have seen the pension credit come into force, with more than 2 million people in retirement receiving the income guarantee and 2.7 million receiving the pension credit. The rise from £69 to £109 is unprecedented in overcoming pensioner poverty, and it is absolutely crucial that we build on that in the years to come. Let us refute immediately the idea that the changes in advance corporation tax, and with it the dividend credit, first, started under us, and secondly, were responsible for damaging equity-based pension programmes. After all, it was Norman Lamont in 1993 who first started to reduce advance corporation tax, and with it the dividend credit, saying that it was unworkable and was damaging the way in which people made choices about their investments, including into research, and involved the danger of pushing jobs overseas. My right hon. Friend the Chancellor continued that logic, and reduced ACT by 3p, and by 4p for small businesses. The equity markets were then sustained until the world capital markets collapsed, with £250 billion wiped off the stock exchange. The resulting impact on personal and equity pensions is known to all of us. Adair Turner has said that we lived in a fool's paradise—that people's reliance on the equity markets from the 1980s meant that they misled themselves about the sustainability of pensions in view of the failure to understand the impact of people living longer, on the one hand, and working less, on the other.

The fact is that people were not prepared to face up to the challenge of the future, and we are. We are prepared to offer a consensus to the Opposition parties, because people will not forgive any politician who does not look 30, 40 and 50 years ahead and come up with solutions for the future. It is a challenge for the nation, not just for political parties. It is a challenge for individuals to build in retirement an income that will sustain and support them with dignity and comfort; a challenge to business to ensure that it is prepared to join us in making that contribution; and a challenge to all of us to determine who pays, how they pay, at what point they are entitled, and what that entitlement will bring. Until we face the challenge of people living longer and wanting to work less and retire earlier, and people believing that they will enter the labour market at a later age, we will be in a fool's paradise.

The whole programme that we put before the nation, were elected on and are asking the House to affirm tonight was based certain key objectives. They included making the welfare state a ladder or escalator out of poverty instead of a safety net. My right hon. Friend the Chancellor has made tremendous strides, through tax credits, on lifting children out of poverty, and on ensuring that, through our welfare-to-work policies, people can work themselves out of poverty and that they have dignity and self-respect in employment, and that our welfare-to-work policies for those who are incapacitated or sick mean that those who are not
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prepared to write themselves off will not be written off by us. They can thus earn for themselves and the future.

Our aim of having 80 per cent. of the working-age population in work will not only sustain services and generate the productivity that our economy needs to invest in them, but obviously help to sustain us in retirement through the income that we need for an acceptable pension.

Above all, we must link the welfare-to-work, pension and employment policies so that the nation supports those who are prepared to support themselves and helps those who, because of past failures, need our support in caring and retirement.

We must also recognise the change that has taken place in the past 50 years in the make-up of our social and economic structure. A fivefold increase in divorce has changed not only the income of the households responsible but also their housing requirements. That is why £12.3 billion currently goes into housing benefit and £12.7 billion goes into incapacity benefit, including the attendant variable and passported rates that go to those income support benefit recipients. It is why, in the past, so much money went towards supporting people in unemployment. However, in the past eight years, billions of pounds have been translated from propping people up in idleness into ensuring that they can look after themselves and contribute to our economy.

I pay tribute to my right hon. Friend the Chancellor for his vision in raising the windfall levy, investing in the new deal and translating investment in idleness in the welfare state into productivity, growth and an economy that works better than any economy in the western world. That is why Labour Members are determined to continue with the reform agenda, which threatens nobody but provides the extra support for which my hon. Friend the Member for Kingswood (Roger Berry) asked this afternoon for those who need long-term care and cannot work for themselves.

However, the agenda demands responsibility, matched by rights, from every individual so that all Members of Parliament can go to their constituencies and offer the prospect of an enabling Government, who have developed the child trust fund, Sure Start and allowed us to look to the long term in building assets for those who previously had nothing. Equality in this country has been transformed so that those who had little will now have the opportunity of working and developing as a result of the minimum wage and the tax credit system, and having work that is worth while and can bring prosperity to them and their families. With that come the responsibilities of a something for something society.

It is important to spell out again tonight that the Government's role is not to prop up the welfare state but use it to liberate people to tackle matters for themselves. We value the skills agenda that the National Employment Panel is developing to ensure that people have the prospect of looking after themselves and their families in future. The Government enable them to do that. The vote this evening is about whether we go forward to the future or back to the miserable world of 3 million unemployed, and the benefit-dependant society, where tax was used to prop up the welfare state
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rather than eliminating people's need to rely on it. We should reject the amendments and vote for a programme for the future.

Question put, That the amendment be made:—

The House divided: Ayes 241, Noes 335.

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